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How To Guide

IFRS for SMEs | How to disclose deferred tax and taxation on the SME template

Published:  01/11/2018
How to disclose deferred tax and taxation on the SME template:
  1. Deferred tax mapping
  2. Deferred tax note

Applicable from version 2017.01.01 onwards, click here to access the latest templates

The SME template incorporates the 2015 Amendments to IFRS for SMEs, which includes the following amendment:
“Alignment of the main principles of Section 29 (Income Tax) with IAS 12 Income Taxes for the recognition and measurement of deferred income tax, but modified to be consistent with the other requirements in the IFRS for SMEs (covers all amendments to Section 29, except those from amendment 45, and the related definitions in the glossary).”
The following additional changes were made to enhance the mapping and the note disclosure:
  • Additional mapping numbers made available to cater for deferred tax movements and balances
  • Additional disclosure line items added to:
    • Deferred tax note
    • Taxation note
  • Other comprehensive income note and statement – mapping and line items added for “Income tax effects of tax rate changes” and “Income tax effects of prior period over or under provision”

  Instructions:

1. Deferred tax mapping

Mapping for deferred tax balance sheet accounts has been split between Assets and Liabilities categories in assign mapping. Mapping is only assignable via the Liabilities section.
See below the mapping for deferred tax assets and liabilities

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  • Despite all mapping numbers being included under liabilities, only those that can be classified as either an asset and/or liability or only as an asset, have corresponding ‘flips’ in the asset section.
  • The signage of the mapped accounts determines if the value is an asset or a liability, which in turn populates the respective tables in the note.
  • Only three items are assignable from the assets section, these are “Tax losses avail for set off against future tax in”, “Tax losses not recognised” and “Valuation allowance of deferred tax assets”. This is to facilitate the correct signage in the note.
  • Mapping numbers for tax related to changes in reserves is still found under the Equity section. (Eg: 1.5.0.330.100.000.???.400.00000.002)
See below an example of how the mapping works:

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2. Deferred tax note

Summary table

A summary table is available at the top of the note with the option to either offset tax assets against liabilities or keep tax assets and tax liabilities separate.

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This selection drives the way that the deferred tax balances are presented on the statement of financial position.

The undefined difference related to the summary table compares the sum of the amounts in the deferred tax liability and asset components tables to the closing balances of the deferred tax assets (liabilities) for the current and prior periods as per the mapped accounts.
 

Major components of the deferred tax balance

Major components of the deferred tax balance split between deferred tax liability and deferred tax asset, broken down into the applicable temporary differences that make up the balance(s). most known temporary differences have been included under the respective sections.
 
There are 2 options available on how to complete the major components section if your trial balance only includes the closing deferred tax asset (liability) balance. 
Option 1 (recommended)Option 2
Map the closing balance to any item and do reclassifying journals for the split between asset and liability and between the line items within each. This ensures that the correct mapping pulls through to the note and the face of the balance sheet and that no undefined difference arises.Manually type the split between asset and liability and between the line items within each.

If using this option to complete the major components section, the note will not align with the amounts pulling through to the face of the statement of financial position if the “Keep tax assets and tax liabilities separate” presentation option has been selected. To ensure that the financial statements remain in balance, select the “Use table totals below to present tax assets and tax liabilities on the Statement of Financial Position” extended option at the top of the deferred tax note.

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Reconciliation of the deferred tax balance

A reconciliation between the opening and closing balances of deferred tax assets (liabilities), separated into the following categories:
  1. Movements recognised in profit or loss. Additional mapping numbers have been added for deferred tax movements through profit or loss; refer to mapping range 2.9.0.900.100.000.200.
  2. Movements recognised in other comprehensive income. This category is populated by accounts mapped to the tax on reserves mapping range (Eg: 1.5.0.330.100.000.???.400.00000.002).
  3. Movements recognised directly in Equity.
  4. Other movements.
The undefined difference in the reconciliation section compares the sum of the respective movements in the abovementioned categories (including overridden values) to the closing balances of the deferred tax assets (liabilities) for the current and prior periods as per the mapped accounts. 
 

Unrecognised deferred tax asset

In this section you are required to disclose any unused tax losses, tax credits or deductible temporary differences.

The amounts must be input before applying the applicable tax rate.  For example, if a company recognises tax losses of R100 000, and the tax rate is 28%, the related tax benefit would be R28 000.  However, it is the loss of R100 000 which is presented.

If we assume that only R5 000 of the assessed loss is applied to recognise a deferred tax asset, then the R5 000 is deducted from the total tax loss to present the amount of the total tax loss for which a deferred tax asset has not been created.  This amount is then further analysed into the date ranges where the tax loss is expected to expire.
 
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For unused tax credits and unused deductible temporary differences, it is only necessary to disclose the expected expiry analysis.  These amounts are also presented prior to applying the applicable tax rate.  
 
 
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